SACRAMENTO – State Assemblyman Ted Lieu (D-Torrance) today will introduce a lending-regulation bill that seeks to mandate the obvious – that people who want to buy a home can actually afford the mortgage, property taxes and insurance.

The prevalence of exotic mortgages that put home buyers into loans they couldn’t afford to repay when interest rates jumped and home values plummeted has contributed to a wave of foreclosures across the country.

Lieu wants to make sure future home buyers do not find themselves in similar circumstances.

His bill would require mortgage lenders to ensure that borrowers can afford their basic monthly housing bills before qualifying them for a home loan.

He released the details of his bill Tuesday to The Associated Press, as the latest housing data showed foreclosures had reached a two-decade high in California in December.

California has the greatest number of foreclosure filings nationwide and the fifth highest rate of home foreclosures.

The bill by Lieu, chairman of the Assembly Banking and Finance Committee, would ban certain designer mortgage loans and allow some homeowners to refinance their loans before higher interest rates kick in without paying fees or penalties.

Some of his proposals are opposed by the industry representing mortgage brokers.

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